Canada Post says it's confident it will beat a challenge by the United Parcel Service that alleges unfair competition. UPS is suing the Canadian government for $230 million, claiming Canada Post unfairly subsidizes its courier service, Purolator.

Canada Post's John Cainz is confident the NAFTA tribunal will find no evidence of unfair subsidization. "If the hearing is done fairly we won't have a problem. We know there is no subsidy issue in Canada anymore, because we haven't taken a subsidy in over 10 years. We pay our own way through generated revenue."

And Cainz says Canada Post has been examined twice by Canada's competition bureau, with no evidence that its letter service subsidizes the courier service.

Still UPS spokesperson Tadd Segal, says his company would only appeal to NAFTA in an extreme case, "and this is an extreme case, where the government of Canada, through Canada Post, is making it extremely difficult for private sector companies to compete against their monopoly in Canada."

Segal maintains Canada Post didn't reveal everything when it was examined by the Competition Bureau. He says the NAFTA tribunal should be more thorough.

If the Canadian government loses to UPS it will have to pay $230 million and likely lose Canada Post's lucrative courier service.